Report\Interview - Z1 Enterprises

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I received a few PMs from people wanting to read my report\interview about Z1 Enterprises. I went out to visit Jeff a week ago or so to pick up carb rebuild kits, and a kreem kit for my GS550. It's great to drive somewhere, get parts when you need them, and pay less than you would from any mail order place! I saw Jeff's new facility; pretty neat! Cool building, definitely a 'restoration project.' Now that the bike is running, I'll be back for a Dyna-S and some other bits. He was kind enough to give me a tour, even though I showed up unannounced, and spent quite a bit of time talking about bikes with me.

This report was for a class (400 level) in Market Research, specifically a segment about Customer Orientation, Market Mix, and some other customer service stuff. At the time I had a 76 KZ400, my second bike, and I was restoring it... And Jeff was great by AIM, phone, email, and KZrider.com. So I thought of him as soon as I was given the assignment. Excuse any technical stuff in it, but I think just about anyone can understand the general ideas. Please note this report is a little dated, being a little more than a year old now. Jeff has realized his goal of selling parts for most vintage bikes, and when I saw him last week, he said he has plans to continue to grow his selection, but not to get into accessories or parts that are hard to warehouse.

Please consider him for any parts; he beats the pants off oldbikebarn and the like!

Introduction

Z1 Enterprises is a small web-based company with a physical location in nearby Marion NY. Z1 Enterprises specializes in hard to find parts for one of the most popular collector motorcycles in recent history; the 70s and 80s Kawasaki Z1. Some of these 1000cc motorbikes are now 30 years old, and as collectors now recognize the Z1 as a fantastic piece of motorcycle history, they are attempting, at considerable cost to restore them to like new condition, or simply get them back on the road in a respectable fashion. (1) Z1 Enterprises also sells parts for other vintage Japanese motorcycles, selling mostly hard to find products. The company consists of three full time employees and two part time. One part time employee helps with refurbishing and selling complete motorcycles, while the other is strictly for computer help.
I first came into contact with Jeff Saunders, owner of Z1enterprises through the most service oriented part of Mr. Saunders business; he helps diagnose motorcycle problems through internet message boards, at no charge. This advice is of great value to the community associated with the motorcycles that Mr. Saunders specializes in; he arguably has more experience than anyone else with these bikes. Jeff is not out there looking for opportunities to sell parts through this kind of help, but seeking to honestly provide assistance to those in need. After talking with the ever friendly Jeff about parts needed for my vintage Kawasaki, he actually sent me some small o-rings, at no charge, which I needed for my motorcycle. Later, I actually drove out to his warehouse to pick up a part I needed in a hurry. Not only did Mr. Saunders provide me with a very competitive price, he was able to special order the part and have it in my hands in half the time of his competitors. I actually turned to Mr. Saunders for this first real order after being told a part was in stock by a competitor of his, only to find out that it would take nearly a month for the supplier to get me the part. In less than a week’s time from asking Mr. Saunders to order the part, I had it.

Mission and Vision

As a small company, it is no wonder that Z1 Enterprises website does not contain a Mission or Vision statement page, nor can Mr. Saunders fax me a page from the employee manual; it doesn’t exist. However, this is not to say that Mr. Saunders does not have a clear vision of where he would like Z1 Enterprises to go; “Gradually expand, to cover all makes of Japanese motorcycles spanning 1970-1985, adding more and more products to provide the one-stop shopping for a customer, within reason. One key is to expand gradually and continue to be able to stock all we sell and not sell what we don't have. I've been very careful about not expanding too fast and letting customers down.” (2) Clearly, customer service itself is a core component of Mr. Saunders' plans for Z1 Enterprises. In fact, through out the interview, much of his discussion lead into ideas of growth, but always came back to ideas of how this growth my benefit or harm the service level. Mr. Saunders had this to say about the speed of growth he’d like his business to undertake; “For example; I would love to sell 50-100 dyna ignitions a week, but if I did that, I wouldn't be able to fill those orders and I would have customers waiting weeks for those items.” Again, this shows that while Mr. Saunders’ company may not have the vision statement printed in a fancy font hanging in the lobby of a corporate building, his small company has a clear vision that is highly centralized around customer service.

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More (Part 2 of 3):

Internal Marketing Practices

Internally, the marketing practices at Z1 Enterprises are extremely hands-on, the kind of approach that has always attracted me to management of a small business. It is clear that one of Mr. Saunders’ primary practices is that of assistance to the community at large. This practice creates an image that this business is about personal help, and that the owner of this business is a trusted member of the same small enthusiast group as his customers. Mr. Saunders pointed out his policy of accessibility as a prime asset to his integrated marketing; “We provide numerous ways for a customer to contact us - these are mentioned in several places on the web site. Phone, fax, email, even AOL IM. I feel this is key, as when you look at some of the competitors, they hide behind an email address.” (2) Being that Z1 enterprises is so heavily centered around their website and ability to ship products, Mr. Saunders was able to clearly define his place\shipping and customer communication policies “The customer always gets an email confirmation of the order. For UPS shipped items, the customer also receives shipping / tracking notification. In the event there is a delay in shipping, the customer is notified of the delay and usually given some options; ship what's in stock, or ship complete. Most shipping occurs on the same day, or next day.” (2) This policy combined with the open communication, creates a measurable set of policies related to place and product that definitely enhance the overall service image of the company.

Customer Orientation

As previously discussed, Jeff Saunders, the owner of Z1 Enterprises is an active member in the community of enthusiasts that enjoy these vintage motorcycles. His customer orientation is very strong, as evidenced by the acceptance level in this community of a business operating to profit from the enthusiasts. Z1 Enterprises goes so far with the Customer Orientation as to ask direct diagnostic feedback of some customers in terms of directions or descriptions of their parts; sometimes asking them to evaluate the quality of the delivered product. Mr. Saunders revises descriptions and his inventory based on this feedback, which shows a high level of customer orientation. In addition to these post-ordering communications, Jeff mentioned that orders are screened by knowledgeable folks to make sure people have ordered the proper quantities and parts for their motorcycles; “We validate the order is what the customer needs versus what they ordered. In some cases the customer mis-orders and we call them up to confirm.” It is worth noting that many small online retailers will not take the time to place a phone call, but, if they do this sort of screening, will just send a formal email. Mr. Saunders continued, “A good example is someone ordering just one copper exhaust gasket and other parts that are for a 4-cylinder bike, or ordering a combination of parts that don't make sense; something like regular valve springs with performance cams… More often it's they've ordered the wrong item - potentially because the description is vague - so we do adjust the descriptions from this.”I believe it is this type of feedback process that has created the acceptance, even celebration of Z1 Enterprises as a valuable part of the vintage Kawasaki motorcycle community.

Customer Relationship Management

For Z1 Enterprises, CRM is done so well that other people advertise for Z1 Enterprises based on their prior experiences. On vintage Kawasaki internet message boards and forums (2) people regularly suggest parts that might fix a problem, and then go on to say that Z1 Enterprises is the place they should buy it because they will get a good price and good service. It is interesting that if one does a search for Mr. Saunders’ name on the internet; two websites are returned with positive language naming Mr. Saunders as the owner of Z1 Enterprises, and concept that would be unfamiliar to most part suppliers that hide behind a company name, afraid of bad publicity when customer relationships fail.
Mr. Saunders maintains this relationship level through previously discussed availability and communication during and after the ordering process. Occasionally, Mr. Saunders noted that things have gone wrong; “We moved computer systems and I lost track of an order, the customer was not happy. I shipped him the product via an expedited service, included a free T-Shirt, and offered him a discount off the next order - plus sent him an apologetic email.” Mr. Saunders noted that the new computer system is actually helping prevent mix-ups that were a more common error in shipping. “Our new computer software helps - it imports the information directly from the web site. That helps with the address mix-up. The other issue is down to carefully reading the order.” I think that this alone speaks to the idea that Z1 Enterprises is actively seeking improvement in customer service, and is willing to go through the expense, especially for such a small operation, to ensure that customers are served in the best way possible.
When questioned directly on his level of commitment to improvement, Mr. Saunders said “I know we can do better, but I also know we do MUCH better than some of the competition.” Recognizing room for even more improvement in what many would consider an already excellent service reputation further shows a clear commitment to CRM.
I was impressed regarding the importance and focus on repeat business for Z1 Enterprises; “Repeat business is very important. Keeping track... Discounts, not really yet, although I do occasionally if the order is a good size. Unfortunately the profit margins are too thin to give much. Where I do help the regular customers is with used parts for very cheap prices (or often free).” This kind of personal attention to the customer should turn any customer into a repeat customer, and shows strong CRM.

Marketing Mix

For a business such as Z1 Enterprises, in relation to customer service, place is going to be the most important component of the Marketing Mix. While customers can easily compare prices to ensure they are getting the best deal, they will be extremely dissatisfied if the product is not delivered accurately and in a timely manner. Large internet-order companies have expensive custom automated ordering and warehousing; sometimes there is little, if any human interaction in the entire process. Other large businesses similar to Z1 Enterprises might have human interaction on the packaging level, but they will not have the experience to make judgments about what has been ordered, and because of the large volume and labor involved, it is unlikely that service can possibly be the same as a smaller company like Z1 Enterprises. “For items shown on the web site, we try and keep sufficient inventory in stock so we can ship the same day. Generally we achieve about 98%+ on this.” Furthermore, it was noted later in the interview how yet another ‘above and beyond’ stage of customer orientation in terms of place\time comes into play; “If a customer orders items, then places another order in the same day. If we combine the orders, we refund the excess shipping.” This shows that Z1 Enterprises recognizes some of the frustration that is often associated with ordering specialty parts for motorcycles, and is actively seeking to eliminate unnecessary price increases for the customers. Related to this was the prior discussion about recommending other parts needed or the proper quantities. Mr. Saunders would be just as likely to let a customer or potential customer know of other parts he will need, as he would to let the customer know when certain parts are unnecessary or incorrect.
Related to the place component of Z1 Enterprises’ marketing mix is availability; if the parts are not available when needed, Z1 Enterprises will loose business to places such as eBay, where owners often buy and sell needed parts with one another year round. “Handling peaks and valleys is a purely manual process. The calendar is key to business planning - engine rebuilds start in the winter, routine maintenance items in the spring (cables, batteries, etc). K&L Supply, Motorcycle Stuff, Dynatek are the top suppliers… Warehousing… just maintaining steady inventory levels to handle a peak week. The exception is some of my Japanese suppliers - the lead-time is so great you have to order in quantity and stockpile it.” This shows that Z1 Enterprises not only understands the parts they sell, but the nature of motorcycle repair. People often would rather be riding than considering major engine rebuilds in the middle of the summer, so these parts are not going to be in as large a demand, while consumables in the warmer months will likely be in greater demand. Again, this sort of understanding shows customer orientation and a high priority on CRM.

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Conclusion

Clearly, Z1 Enterprises in an example of a small business doing customer service right. However, the purpose of a qualitative study such as this one is to attempt to describe, and hopefully to illuminate opportunity. My first recommendation is to continue the same processes that have made Z1 Enterprises so customer focused. Secondly, I would ask Z1 Enterprises to consider a formal or regular research of their customer base by, possibly by informal means to keep the approachability and 'personability' of the company. Thirdly, I would say that in terms of the product aspect of the marketing mix, Z1 Enterprises would be taking a step in the right direction if they sought more diversification, perhaps expand the same model of specialization to other motorcycles, perhaps all within the Kawasaki brand, or limit to certain model years. Mr. Saunders mentioned this idea early in the interview, as noted at the start of this paper. Fourth, I would suggest that as the business grows larger, models will be needed for inventory, based on prior experience, but the hands on nature of inventory management will likely become impractical for Z1 Enterprises if the business doubles in size. Finally, I would suggest that Jeff Saunders remain the company spokesperson as owner. Clearly, Jeff is a critical asset in all aspects of customer service for Z1 Enterprises, and his friendliness and willingness to help create a customer orientation that will be difficult for his competitors to match.

The qualitative scale I would provide to Z1 Enterprises for determining if these concepts are being matched is as follows:

-Do the customers feel like the person they are communicating with is more than just a technical support representative?

-Do the customers feel a sense of connectedness with the company as a citizen of the vintage motorcycle community?

-Do we know what the customers truly want in terms of products, delivery and price? Can we quantify it? Can we model it?

-How can we continue approachability while creating formal enhancement to our service levels that will allow growth?

I feel that Jeff Saunders already has the all the right ideas about what service means to a small company, and the impact a bad or excellent reputation can have in such a tight knit community. I personally look forward to his success and know that his customer service level has gained me as a customer.

Hope you guys find this of interest. I'm new here, so if starting a new thread for this was inappropriate, please let me know.